For Computing Holding Period For Capital Gain The Period To Be Taken From Date Of Allotment Of The Flat: ITAT
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that for computing the holding period for capital gain, the period is to be taken from the date of allotment of the flat.The bench of Aby T. Varkey (Judicial Member) and Om Prakash Kant (Accountant Member) has observed that for computing the holding period for capital gain, the period should not be taken from the date of...
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that for computing the holding period for capital gain, the period is to be taken from the date of allotment of the flat.
The bench of Aby T. Varkey (Judicial Member) and Om Prakash Kant (Accountant Member) has observed that for computing the holding period for capital gain, the period should not be taken from the date of the application of the flat. The rights of the assessee arise in the said flat only on the allotment and not by way of filing an application.
During the scrutiny proceedings, the Assessing Officer noticed a long-term capital gain’ (LTCG) of Rs. 8,98,59,373 declared by the assessee on transfer and assignment of provisional reservation rights in a flat, which was booked by the assessee in an apartment namely "BLU Estate & Club", Worli (Mumbai).
The Assessing Officer disallowed the assessee's claim of LTCG on the transfer of rights in the flat and assessed it as a short-term capital gain. Since the flat was transferred by the assessee on December 14, 2016, the assessee considered holding the rights for more than the period of 36 months and treated the gain on the transfer of the right as LTCG. However, the Assessing Officer has referred to the MOU dated December 14, 2016, in which it was mentioned that the flat was allotted to the assessee on October 31, 2015.
As per the date of allotment noted in the MOU, the period of holding the rights in the said flat is less than 36 months, i.e., from October 31, 2015, to December 14, 2016. Therefore, the Assessing Officer rejected the contention of the assessee of the LTCG and held the gain on transfer of the rights of the flat as STCG.
The CIT (A) granted relief to the assessee, deleting all additions and disallowances.
The department raised the issue of whether the capital gain on the transfer of rights in a flat is LTCG or STCG.
The ITAT held that the flat was allotted to the assessee on October 31, 2015, as mentioned in the MOU dated December 14, 2016, which is a document signed by the buyer as well as the seller of the rights. Therefore, the holding period of the rights in Flat is less than 36 months, and thus the gain arising from the transfer of said rights is short-term capital gain (STCG) only.
Case Title: DCIT Versus Narendra Gehlaut
Case No.: ITA No. 1101/MUM/2022
Date: 31/07/2023
Counsel For Appellant: K. Gopal
Counsel For Respondent: Jasdeep Singh